The Law Office of Kurt H King

April 22, 2014

When Can You Sue Again?–Res Judicata & Collateral Estoppel

In its April 15, 2014, Xiaoyan Gu v. Da Hua Hu, Ace INA Insurance Company Canada opinion (ED100001), the Eastern District of the Missouri Court of Appeals reversed the trial judge’s summary judgment award in favor of defendant insurer.

Facts of the underlying cases:  Husband and wife  were passengers in a truck rented to haul grapes and carrots between California and Ontario.  Defendant Ace INA Insurance Company of Canada wrote the Garage Automobile Policy which insured the Volvo dealership which rented a tractor truck to the driver (who opted not to purchase insurance coverage on the rental).  However, the garage policy covered additional insureds if that person [the driver] operated any automobile in connection with the business of the dealership, and the court so found since the renting of the truck furthered the business of the dealership.

Note that this is the third trial thus far in this case: the first, a bench trial for personal injuries of the husband and for loss of consortium by his wife  against the trucking companies and the driver.  The court awarded husband nearly $14 million and  wife $1.5 million.

The second trial, judge-tried also, was by husband  only for equitable garnishment on the garage policy issued to  the dealer by defendant Ace INA.  On the first day of trial, the defense moved to amend its pleadings to assert the exclusion in the policy that applied when the ” automobile is being used . . . for the carrying of goods or materials for compensation.”  The court ultimately ruled that such late assertion of the defense was unfair, and denied the motion for leave to add that defense.  Judgment resulted in favor of husband against Ace INA Insurance Company on his garnishment action.

This brings us to the third case which is the subject of this appeal–another equitable garnishment case against Ace INA to obtain payment of the personal injury judgment but this time brought by the wife.  This time around, the defense timely raised the carriage-of-goods exclusion, and the trial judge upheld that defense in granting summary judgment in favor of insurer Ace INA.

On appeal, wife argued that collateral estoppel and/or res judicata barred the insurer from raising the carriage-of-goods exclusion.  The court of appeals rejected the collateral estoppel agrument because that exclusion/defense was not “fully and fairly litigated” in the first garnishment case by husband.

Next, the Eastern District focused on res judicata.  For that doctrine to apply, these four “identities” must co-exist: 1) of the thing sued for; 2) of the cause of action; 3) of the persons/parties; 4) of the quality of the person for or against whom the claim is made.  The fourth identity was undisputed, so the the court analyzed the first three.

The Thing Sued For:  In the court’s eyes, both garnishment cases–that of husband and wife–sought the same thing–“[g]arnishment of insurance proceeds to satisfy a judgment that stems from damages caused by the same motor vehicle accident.  No problem finding this element.

The Cause of Action:   This element is defined as “the underlying facts combined with the law, giving a party a right to a remedy of one form or another based thereon.”   Again, a finding that this element existed since “no different or new facts were required” for [wife] to establish her garnishment case.

The Parties:  This element requires that the parties be the same or in privity.   For privity to exist, the interests of a party and non-party in privity must have been so “closely intertwined that the non-party can fairly be considered to have had his or her day in court.”  Here, this element existed due to Missouri law holding that a judgment creditor “stands in the shoes’ of the judgment debtor, and thus wife has the same rights as the driver under the garage insurance policy from Ace INA.

Since all four identities coexisted, the trial judge erred in allowing insurer Ace INA to raise this defense.  The court of appeals therefore reversed and remanded for entry of judgment in favor of wife.

(Side note:  Res judicata  applies to claims or defenses that could have been raised previously, as well as those which were.)

 

Kurt H. King

Law Office of Kurt H. King, 20 E. Franklin, Liberty, Clay County, Missouri 64068

816.781.6000

http://www.kurthking.com

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